Wednesday, March 17, 2010

BSNL In Air India's way

If you go to the business books section of any book stall, it’s almost certain that you can saw books like Toyota’s way, Google's way etc. These books are all about how Toyota invented new methodologies and how they achieved global scale and become market leaders. We too have many success stories like that - Relience, Pathaloon, Tata Steel, Indian railways etc.

But some months back we also heared about Air India's story, 'Maharaja' is still fighting his last battle for survival. A company which had a monopoly in Indian skies for more than four decade can not operate if government refuses to bail them out. Now the latest in this series (the so called Air India's way) is another government behemoth BSNL- yes our own Bharat Sanchar Nigam Ltd. Markets accepted the fact - the world's most competitive mobile market (Chinese mobile market is bigger than that of India's but in terms of dog fight competition no one can beat Indian market) - BSNL is no more in the choice list of mobile customers.

If you go to any shop in bangalore and ask for a BSNL mobile connection, you will be surprised to hear that most of them dont have even a single BSNL sim.None of my friends in Bangalore have a BSNL connection. They have Vodafone, Tata DOCOMO, Airtel, Tata Indicom, Virgin etc but not BSNL. In Kerala situations some what better due to some of their good plans. But still in the land line front people have to wait quite a long time. This company, which was once the face of Indian telecommunication, will slowly go to oblivion if we are not ready to do something.

Look at the performance of BSNL in last few years. The company made a profit of 10,183.29 crore in 2004-05, profit reduced to 8939.69 crore in 2005-06, then to 7805.87 crore in 2006-07 and more than halved to 3009.39 crore in 2007-08, and a disastrous reduction to mere 574.85crore in 2008-09.

BSNL's recent history says that in the last two years they neither expanded their mobile Network, nor awarded new contracts for mobile network and equipments .At the same time the competitors - whether it is Airtel, Vodafone, Relience or Tata - expanding their network in lightning speed. From nowhere in 1995 to 2000, these companies reached almost every corner of India by 2010. If you went to any village in south India, its may not necessary that you may find good roads,but network will be there and you can even recharge you prepaid sim. The sad thing is that even if BSNL have pan India presence, operating from Kanyakumari to Kashmir and Gujrat to Arunachal, they are unable to transform that position to a leading mobile operator - which is the requirement of time!!!

After forming the BSNL in 2000 - following the split of Postal, telegraph and telecommunications department - BSNL achieved the second position in Mobile sector just in six months, second only to the market leader Bharti Airtel. Later it lost the momentum and witnessed landslide erosion in market share and slipped to fourth position.

The erosion in market share is mainly due to the stagnation in the expansion of network as well as the inability
to fight with the popular mobile plans of competitors. BSNL tenders like any other government tenders taking long time for approval, after approval it will ran in to controversies. Sometime someone in the top will add some impossible clauses to it or politicians and beaurocrats will decides something else, or the company which didn’t got the contract will take BSNL to court.

The end result will be a huge delay in expansion of network as well as the customer dissatisfaction. As BSNL is a government company anyone can take BSNL to court - and due to 'fast processing' of cases in Indian courts and 'quick decisions' taken by officials company will lose the precious time. It can only watch Airtel and other new players eating out their market share.

In 2006 BSNL floated a tender for 63mn lines, but Motorola - who failed to make it, questioned the selection procedure and took BSNL to court. Last year company floated another tender for 93mn lines this time 'Nokia Siemens Network' took them to court.

The only way to save BSNL is to allow them to operate in a professional manner. Anyway government made BSNL a company; then allow it to operate just like any other private mobile company. No need for any interference from ministry or politicians. Make the tendering and awarding of contracts faster. If Airtel want to expand their network they will simply call their preferred company and award the contract. BSNL's decision to award the contract to the lowest bidder is not all a professional decision. Cheaper doesn’t mean better, it may but not necessary quality comes at a price. Even after the so much dog fight in Indian telecom
market players are still not able to deliver highly qualified service.

Accept the new mobile number portability law as a chance to penetrate the market. They have to offer good packages and quality services to customers. The long delays in providing the connection, whether its broadband or new telephone will only make the customers to move away- remember that old days are gone.

If BSNL failed to accept the facts and make a turnaround, they will lose the game to private sector. It took government a long time to decide whether or not to bail out Air India. In the case of BSNL it may be even difficult as finance ministry may not like the hole in budget to become bigger.


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